Netflix Inc. (NASDAQ: NFLX) and Apple Inc. (NASDAQ: AAPL) were sold the most during the quarter. The top 50 hedge funds discarded $2 billion worth of Netflix shares, making it the most sold stock in Q216. Viking Global Investors drove the selling spree which sold 22% of its stake, followed by Tiger Global, which dumped its 4.2% stake worth $1.6 billion.
Netflix declined 10.5% during Q2 and is pressed with the company down 17% year-to-date. The weak number of subscribers outside of US might have jump-started the negative outlook for the video streaming company.
Meanwhile, Apple still holds a top spot for being sold this Q2, after being the most sold stock in Q1 (amounting to $7 billion worth of shares). About 40% of the position held by the biggest hedge funds were removed from the stock (amounting to $1.8 billion). Despite declining by 12.3% during the second quarter, the tech giant is still up 3.9% for the year. Due to the slowing growth of the iPhone maker, some investors are determined to seal their profit in this company.
Despite the huge selloff for large and mega cap firms, the top 50 hedge funds increased their equity exposure by 0.3% in Q2. This represents a huge comeback from the ~7% equity exposure decline at Q1.
The top 50 hedge funds purchased a total of $2.2 billion in equities in the second quarter, a significant gap from the aggregate sale of $55 billion in US equities in the previous quarter. Mainly buying from consumer sectors- with an added inflow of $4.2 billion worth of shares to the Consumer Discretionary sector and $1.8 billion to the Consumer Staples group. Meanwhile, the Financials sector had the largest aggregate sales amounting to $3.4 billion worth of stock removed, with the Health Care group having $2.1 billion aggregate sales during the quarter.
The top holdings favored the small cap firms and bought about $1.7 billion worth of stock. This is a huge gap from the $567 million worth of shares acquired from large cap firms, with the mega cap firms only having $141 million purchased.
The top 5 purchases of the biggest hedge funds were Starwood Hotels & Resorts (+$2.7 billion), St. Jude Medical (+$2.3 billion), Virgin America (+$1.5 billion), Yahoo (+$1.38 billion) and Nike (+$1.35 billion).
While the top 5 sales included Netflix, Apple, Allergan (-$1.4 billion), Alphabet (-$1.1 billion), and Zoetis (-$1 billion).
Factset reported the data this Thursday.
With these huge movements, hedge fund holdings still continue to underperform. The combined hedge fund portfolio of the top 50 holdings underperformed the S&P 500 Total Return Index during Q2 and on a year-to-date basis.
Performance of the top 50 hedge funds is down to a negative 1.2%, in contrast to a gain of 2.5% for the S&P 500 stocks. For the year-to-date, the total return index for S&P still leads on at 8.1%, with the top 50 hedge fund holdings at 5.1%.